U.S. Safe Haven Are Bonds

It wasn’t pretty and it certainly lacked a bang, considering the news backdrop might have been appropriate; the Dow Jones Industrial Average finished at a new all-time high for the sixth consecutive session in a row and that hasn’t happened since 1998.

Although many keep pointing to the easy money theory as the only reason stocks are higher, the big news of the session came from the yield on 10-Year Treasuries, which spiked to 1.60 last week before settling at 1.58 Monday, which is still well off the lows from a week ago.

There is no doubt the market must justify these gains as we move along. However, by the same token, this isn’t mass hysteria where everyone was calling their brokers to buy.  If anything, most individual investors were calling their brokers to sell.

I continue to point to market breadth, using new highs to lows on the New York Stock Exchange, which slipped from last week. Overall, it continues to be encouraging.

Monday, tech stocks got the spotlight after the ARM Holdings (ARMH) takeover news.  It will be interesting to see if Netflix (NFLX) brings tech down, but I don’t consider the company a bellwether. IBM lost that distinction as well -they beat on the top and bottom.

Breadth

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Let Them Destroy Each Other Kurt Schlichter

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This market is still consolidating gains. I would like to see the old resistance point tested and hold as support. 

Today’s Session

The earnings parade continues and not-so-new tech names are stepping it up to the plate.  Big Blue (IBM) crushed it on top and bottom lines.  The key is the company’s Cognitive Solutions segment where revenues improved 3.5% to $4.7 billion after a decline of 1.7% in the first quarter. I still want the company to be even more aggressive on the acquisition front, but it’s a real player in cloud now:

Cloud Share

• 31% Amazon
• 9% Microsoft
• 7% IBM
• 4% Google

My overarching theme of owning Great American Companies is on display with Johnson and Johnson (JNJ) set to open at an all-time high. (Still amazed people buy products every month but think the company they are forking over their hard earned money is part of a greater scam called the stock market and NOT worth owning. Millions of Americans would rather put money in coffee cans than own a company that sold the can when it had coffee inside. Go figure.)

Goldman Sachs blew away consensus, and the shares popped, and then the shares slumped. It’s one of the issues I have with that sector- even when there is good news, the market focuses on weak areas. I don’t think this is bias as much as concern about what lurks beneath the surface and behind opaque walls. 

Housing Front

Housing starts and permits out Tuesday morning underscore my contention investors should have exposure to a housing market positioned to excel in the second half of the year. 

Starts came in at annual pace of 1.189 million well above consensus of 1.163 while permits were mostly in-line at 1.153 million. 

I like the 13.4% surge year over year in single family homes, a sign that maybe millennials are moving out of parent’s basements, but it is also a mark the industry knows there is a co-op/condo glut in many major markets.